Sops for software firms extended by a year

New Delhi: Bowing to the demands of the IT industry, the government Tuesday announced the extension of the tax benefit scheme given to the country's software firms.

Under the Software Technology Parks of India (STPI) scheme, introduced in 1999, Indian IT firms get tax holiday on profits from exports. The scheme was scheduled to end March 2009.

The Income Tax exemption for software companies has been extended to March 31, 2010, from next year, Finance Minister P. Chidambaram said while replying to a debate on his budget proposals in parliament here.

The minister also said it was time to remove exemptions and not to increase income tax rates.

"This decision is particularly beneficial for BPO companies and the small and medium segment, who have been greatly impacted by the rupee appreciation, inflation and signs of slowdown of the US economy," the National Association of Software and Services Companies (Nasscom) said in a statement welcoming the move.

The IT industry body also hoped that this would be ratified by both the houses of parliament by early May.

"This benefit will also give us time to come up with other workable and acceptable options for the future, beyond 2010," Nasscom said.

"The IT-BPO industry is expanding into tier two and three cities which will help remove the pressure on large centres as well as help in more balanced economic development. It is important that we incentivate this move to tier two and three cities with STPI/SEZ (special economic zone) like benefits," it added.
Source: IANS